Bitcoin is one of the best investment options with great returns if and only if you are ready to risk the whole amount. But the price of Bitcoin doesn’t increase all the times, there are times when the Bitcoin drops very badly. But what if I tell if there was a way to make money even when the value of Bitcoin drops?. Surprised? You must be because I am not kidding. This article would tell you how to make money when Bitcoin price drops or falls.
4 Ways to Make Money when Bitcoin Price Drops
1. Use Margin Trading
Margin Trading is a type of trading where a trader can trade more bitcoins or alt-coins than he has in his account. Depending on the exchange, the fees and the leverage % is different. So say, you have 1 bitcoin, depending on the exchange you get more bitcoins for having 1 Bitcoin in your margin exchange wallet. In margin trading, you can have two positions, Long position or short position. In order to make money when Bitcoin falls, you can go for the short position. Margin trading is risky, you shall end up losing at times if you don’t understand graphs. Say you invested one Bitcoin and the exchange gave you 1.5 BTC. You have a short position, which means, you’ll make money when the price of Bitcoin falls and would lose money when the price of Bitcoin would rise. For an instance,
– Bitcoin Price: $2000
– Owned Bitcoin: 1
– Bitcoin You got because of margin trading: 1.5
– Your position: Short
– Money you’ve invested in Margin Trading: $2000 + $1000 (Given by exchange)
– Bitcoin falls to $1800
Basically, when going for short position, you’ll be selling the Bitcoin you already have at the price of $2000/Bitcoin. So you must have sold 1.5 Bitcoin at the rate of $2000/bitcoin. Which means you sold it $3000 and now the price has come to $1800 which means the cost is $2700. So your profit is $300 but, again you’ll have to pay the fees and other charges and the remaining amount is your net profit. So basically, you got 0.10-0.20 BTC on trading 1 BTC.
Benefits of Margin Trade
- Trade with lesser amount
- Profit on growth as well as fall of Bitcoin.
- Short term profit/loss
- Lesser risk of losing money.
2. Trade at Bitcoin Future
Some company such as OrderBook.net trade on future bitcoins. This is a method where people can contract on purchase and sales of Bitcoins for future. Where a person would contract for a lower price in the future would make a profit. The same way Bitcoin purchase contract works. The person contracts for a higher amount in the future and once they reach that amount in future the amount would be given back to the owner.
If the current price of Bitcoin is $2000 and I make a contract for selling 1 Bitcoin for some date in next week quoting the amount of Bitcoin would be $1200. If the price of Bitcoin of goes down by that amount then I would be gaining a marginal profit of the contract. And the person who made a contract to purchase the Bitcoin for a higher price would be selling it at that price with a marginal profit.
3. Try Binary Contract
This is exactly like gambling and this has very risks as well as very high profits. This trading is done for a very short term such as 1 day. You would be pledging an amount of gain or loss on the Bitcoin scale. Such as the putting a lower option where you would predict lesser price which Bitcoin may go in some hours. If the Bitcoin get to that then you would be getting Bitcoin at the predicted price which would be beneficial as you sell it once the price hikes.
But on the other end if the price of Bitcoin doesn’t drop to what you predicted you would be losing the whole amount. It acts the same in the case of higher call binary contract. When you predict a higher price of Bitcoin which may reach sometime in that day and if it reaches the predicted price you would be selling your Bitcoins at that price. If your predictions fail you would lose the investment made on the Bitcoin.
3. Try Exchange Traded Funds (ETF)
Exchangeable trade funds are having a track of any commodity, stock or even Bitcoin where you could study the analytics of the fluctuations in the Bitcoin market. Once you can decide on what is the stability of the Bitcoin value. You can take your return before the Bitcoin drops or can analyze when the market growth would be back and carry on with the investment till that point even if the Bitcoin falls in between.
Even this is a gamble where can lose money waiting for profit or can lose profit expecting losses. Investments such as Bitcoin and other cryptocurrencies are investment options if you are willing to even to come out with bare hands. They provide highly exponential growth while there are miserable losses too. A keen observation and analysis with luck being on our side can yield a profit.
These ways help you make money when Bitcoin price drops, but they come with risks too. We are here just to guide you with methods. Neither the site nor the author will be responsible for the loss you make. One thing you should always remember when investing money in cryptocurrency is “Invest the amount, which you can bear to lose”.